MANAGING WITHOUT BUILDING: THE RISE AND REALITY OF EPCM CONTRACTS
Keywords:
EPCM contract · EPC contract · construction management · risk allocation · procurement strategy · turnkey contract · lump sum contract · project financing · FIDIC · front-end engineering design (FEED) · trade contractors · professional indemnity insurance · net contribution clause · dispute resolution · cost control · single point of responsibility · large-scale infrastructure · petrochemical projects · contractor liability · construction lawAbstract
This article offers a comprehensive examination of Engineering, Procurement, and Construction Management (EPCM) contracts, addressing a notable gap in construction industry literature. The authors trace the gradual market shift away from traditional lump sum EPC contracts toward alternative procurement models, driven by the growing scale and complexity of international infrastructure projects and the strengthened bargaining power of major contractors. The article systematically breaks down the structure, legal implications, and risk allocation of EPCM arrangements — covering key areas including design responsibilities, procurement strategy, construction management, cost control obligations, insurance requirements, net contribution clauses, and dispute resolution frameworks. A central theme throughout is the critical distinction between the EPCM contractor's role as a professional services manager versus the EPC contractor's single-point responsibility model. The authors argue that owners entering EPCM arrangements must maintain capable in-house teams and carefully structured contracts to protect their legal and financial interests across multiple simultaneous contractor relationships.
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